EUROPEAN EQUITIES UPDATE: Stocks in the green ahead of US CPI but gains capped by ongoing trade woes

STOXX 600: +0.9%

• Mostly firmer trade in Europe as sentiment attempts a recovery following a mixed APAC lead and amid the latest tariff developments alongside Ukrainian ceasefire updates.


• To recap, US President Trump's 25% tariffs on steel and aluminium took effect overnight with no exemptions. Trump also rolled back on the 50% tariff threat on Canada after Ontario's Premier announced they are suspending the 25% surcharge on electricity exports.


• Trump separately commented that tariffs are having and will have a tremendously positive impact, while he also suggested tariffs may go higher than 25% but did not specify which tariffs.


• In response to the steel and aluminium levies, the European Commission launched countermeasures on US imports, which will allow the suspension of existing 2018 and 2020 countermeasures against the US to lapse on April 1st. Furthermore, it stated that EU countermeasures could apply to US goods exports worth up to EUR 26bln to match the economic scope of the US tariffs but added the EU remains ready to work with the US administration to find a negotiated solution. European Commission President von der Leyen said countermeasures will match the scope of US tariffs and will be entirely in place by April 13th. French European Affairs Minister Haddad says, on EU's response to Trump tariffs, "We can go further".


• Elsewhere in macro updates, the US said Ukraine expressed readiness to accept the US proposal to enact an immediate and interim 30-day ceasefire. Markets now await a response from Russian President Putin. That being said, a Russian lawmaker stated that any potential ceasefire agreement in Ukraine will be under Moscow's terms and not those set by Washington. Later reports suggested Putin and Trump may have a call on the Ukraine talks in the coming days.


• ECB commentary has been abundant this morning amid the ECB Watchers Conference, but was largely overlooked by equities - ECB President Lagarde said they cannot ensure that inflation will always be at 2% but need to set policy so that it converges towards the target.

Sectors: Mostly Firmer; Retail Sector lags

• Mostly higher with no overarching sectoral theme or bias.


• Retail resides as the clear laggard after Zara-owner Inditex (-6.9%) plumbs the depths amid slower Y/Y sales and against the backdrop of trade developments, with the IBEX 35 (-0.3%) the regional laggard. Furthermore, Puma (-22.7%) shares lost a fifth of its value amid dismal guidance.


• Banks sit towards the top of the bunch following several sessions of losses in recent trade and amid relatively stable markets at the time of writing.


• Healthcare is at the middle of the pack as gains amid obesity drug updates - Zealand Pharma (+40%) and Roche (+4.0%) entered into an exclusive collaboration & licensing agreement to co-develop and co-commercialise petrelintide as a potential foundational therapy for people with overweight and obesity - with Novo Nordisk (-4.8%) hit on the news.


• Industrial Goods & Services is also a top performer with shipping stocks in focus after Yemen's Houthis said they will resume blocking ships passing through the Red Sea, Arabian Sea, and Bab al-Mandab Strait after a four-day deadline to lift the Gaza aid blockade ended. Hapag-Lloyd (+3.1%) and Maersk (+1.5%) trade higher on the back of potential increases to premium.

US Equity Futures: ES +0.6%, NQ +0.7%, RTY +0.6%, YM +0.5%

• US equity futures are firmer across the board as sentiment remains somewhat resilient heading into US CPI later today.


• Analysts expect US CPI to rise +0.3% M/M in February (prev. +0.5%), while the annual rate is seen easing to 2.9% Y/Y from 3.0%. The core rate of CPI is seen rising +0.3% M/M (prev. +0.4%), with the annual rate cooling to 3.2% Y/Y from 3.3%. Wednesday's CPI data comes ahead of Thursday's PPI release, where headline producer prices are forecast at +0.3% M/M in February (prev. +0.4%), while the core rate of PPI is expected at +0.3% M/M, matching the January figure; both the CPI and PPI measures will help traders to model what the February PCE data (the Fed's preferred measure) will look like when it is released on March 28th.


• Back to tariffs, reports overnight suggested China’s Commerce Ministry and other departments summoned Walmart (-0.8% premarket) on Tuesday for reportedly requiring some of its Chinese suppliers to slash prices significantly in an attempt to shift the burden of the US tariffs on China.


• Elsewhere, TSMC (+1.1% premarket) has pitched NVIDIA (+1.6% premarket), AMD (+1.0%) and Broadcom (+1.0% premarket) about taking stakes in a joint venture that would operate Intel (INTC) foundries, while TSMC would own no more than 50% of the joint venture, according to sources cited by Reuters.


• In terms of bank forecasts, Goldman Sachs reduced its 2025 year-end S&P 500 target to 6,200 (prev. saw 6,500), citing a lower fair-value forward P/E multiple (20.6x vs. 21.5x). The firm also cut its EPS forecasts to USD 262 (from USD 268) for 2024, and USD 280 (from USD 288) for 2025.

12 Mar 2025 - 10:20- ForexGeopolitical- Source: Newsquawk